Description

NSE mandates KYC validation by KRAs for clients with KYC uploaded during November 1-30, 2025. Non-validated clients will be restricted from trading effective December 20, 2025.

Summary

NSE has issued guidelines regarding KYC validation requirements in pursuance of SEBI KYC Registration Agency (KRA) Regulations, 2011. Clients whose KYC records uploaded to KRA between November 1-30, 2025 remain “On Hold” (not validated by KRAs) will face trading restrictions from December 20, 2025. Affected clients will neither be permitted to trade nor square up open positions until KYC validation is completed. Trading members must access the list of non-compliant clients through the member portal and ensure compliance.

Key Points

  • Clients with KYC “On Hold” status (both Aadhaar and Non-Aadhaar based OVD) uploaded between November 1-30, 2025 will be restricted from trading effective December 20, 2025
  • Affected clients cannot trade or square up existing open positions
  • Open positions will naturally expire on the respective contract expiry date
  • NSE will flag non-compliant PANs as “Not Permitted to Trade” from December 20, 2025
  • Once KYC becomes KRA compliant, trading will be permitted on T+1 basis
  • Trading members must block debit transactions and suspend trading accounts for deceased investors as per centralized demise reporting mechanism through KRAs
  • KRA shares demise data on daily basis with trading members

Regulatory Changes

This circular follows SEBI Circular No. SEBI/HO/MIRSD/FATF/P/CIR/2023/0144 dated August 11, 2023, and builds upon previous NSE circular NSE/ISC/71227 dated November 11, 2025 regarding “Simplification of KYC process and rationalisation of Risk Management Framework at KRAs.”

Additionally, SEBI Circular SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/0000000163 dated October 03, 2023 mandates a centralized mechanism for reporting investor demise through KRAs, requiring all regulated entities to block debit transactions and inactivate/close UCC in all stock exchanges.

Compliance Requirements

For Trading Members:

  1. Access the list of non-compliant clients from NSE member portal at https://enit.nseindia.com/MemberPortal/
  2. Navigate to: ENIT > Log > Downloads
  3. Download file: _Non-Validated_Clients_by_KRA
  4. Block trading for all flagged non-compliant PANs from December 20, 2025
  5. Monitor daily KRA updates for clients who achieve compliance status
  6. Re-enable trading on T+1 basis for clients who become KRA compliant
  7. Block debit transactions and suspend trading accounts for deceased investors based on daily demise data from KRA
  8. Inactivate/close UCC in all stock exchanges for deceased investors

For Clients:

  • Complete KYC validation requirements with KRA to remove “On Hold” status
  • Ensure all KYC documentation meets validation criteria for both Aadhaar and Non-Aadhaar based OVD

Important Dates

  • November 1-30, 2025: KYC upload period covered by this circular
  • December 10, 2025: Circular issue date (NSE/ISC/71736, Circular Ref. No. 48/2025)
  • December 20, 2025: Trading restrictions become effective for non-validated clients
  • T+1: Trading permission restored for clients achieving KRA compliance (T = day KRA reports compliance to NSE)

Impact Assessment

Operational Impact:

Trading members face significant operational requirements to identify and restrict non-compliant clients. Members must establish processes to download and monitor daily lists, implement trading blocks, and manage client communications regarding restrictions.

Client Impact:

Clients with pending KYC validation face immediate trading restrictions including inability to square up existing positions, potentially leading to forced expiry of open contracts. This creates urgency for clients to complete KYC validation requirements.

Market Impact:

The restriction affects only clients with KYC uploaded during the specific November 2025 period who failed validation. Market-wide impact depends on the number of affected clients and their trading volumes. The T+1 restoration mechanism provides quick relief once compliance is achieved.

Risk Management:

The measure strengthens KYC compliance framework and reduces regulatory risk for both exchanges and trading members. The centralized demise reporting mechanism also prevents unauthorized trading in deceased investor accounts.

Contact Information:

Impact Justification

High severity due to immediate trading restrictions affecting clients with non-validated KYC. Direct operational impact on trading members who must block affected clients from December 20, 2025.